Macroeconomic uncertainty and investment relationship for Turkey
Macroeconomic uncertainties are expected to affect investment decisions. This study analyzes the effect of the real exchange rate, inflation, and growth uncertainties on private investment in Turkey, an emerging country. While a generalized autoregressive conditional heteroskedasticity (GARCH) mode...
| Main Author: | |
|---|---|
| Format: | Article |
| Language: | English |
| Published: |
Universitas Islam Indonesia
2020-10-01
|
| Series: | Economic Journal of Emerging Markets |
| Subjects: | |
| Online Access: | http://uiistage.openjournaltheme.com/3310/index.php/JEP/article/view/15267 |
| _version_ | 1828111927174234112 |
|---|---|
| author | Pelin Öge Güney |
| author_facet | Pelin Öge Güney |
| author_sort | Pelin Öge Güney |
| collection | DOAJ |
| description |
Macroeconomic uncertainties are expected to affect investment decisions. This study analyzes the effect of the real exchange rate, inflation, and growth uncertainties on private investment in Turkey, an emerging country. While a generalized autoregressive conditional heteroskedasticity (GARCH) model is adopted to measure uncertainties, the existence of a long-run relationship of the variables is assessed using the bound testing approach. Finally, an error correction model is estimated to capture the dynamic relationship. Findings/Originality: The results for the short-run dynamic estimation show that both inflation and real exchange rate uncertainties have a significant negative effect on investments. As for the long-run equilibrium, exchange rate, inflation, and growth uncertainties have a negative impact on private investments. The application of inflation targeting and exchange rate stabilization policy might effectively reduce uncertainty on investments, thus supporting economic growth in the short term.
|
| first_indexed | 2024-04-11T11:42:31Z |
| format | Article |
| id | doaj.art-b8f117cde2754e3eac428232cd0cda60 |
| institution | Directory Open Access Journal |
| issn | 2086-3128 2502-180X |
| language | English |
| last_indexed | 2024-04-11T11:42:31Z |
| publishDate | 2020-10-01 |
| publisher | Universitas Islam Indonesia |
| record_format | Article |
| series | Economic Journal of Emerging Markets |
| spelling | doaj.art-b8f117cde2754e3eac428232cd0cda602022-12-22T04:25:47ZengUniversitas Islam IndonesiaEconomic Journal of Emerging Markets2086-31282502-180X2020-10-01122Macroeconomic uncertainty and investment relationship for TurkeyPelin Öge Güney0Faculty of Economics and Administrative Sciences, Department of Economics, Hacettepe University, Ankara, Turkey Macroeconomic uncertainties are expected to affect investment decisions. This study analyzes the effect of the real exchange rate, inflation, and growth uncertainties on private investment in Turkey, an emerging country. While a generalized autoregressive conditional heteroskedasticity (GARCH) model is adopted to measure uncertainties, the existence of a long-run relationship of the variables is assessed using the bound testing approach. Finally, an error correction model is estimated to capture the dynamic relationship. Findings/Originality: The results for the short-run dynamic estimation show that both inflation and real exchange rate uncertainties have a significant negative effect on investments. As for the long-run equilibrium, exchange rate, inflation, and growth uncertainties have a negative impact on private investments. The application of inflation targeting and exchange rate stabilization policy might effectively reduce uncertainty on investments, thus supporting economic growth in the short term. http://uiistage.openjournaltheme.com/3310/index.php/JEP/article/view/15267investmentmacroeconomic uncertaintybound testing |
| spellingShingle | Pelin Öge Güney Macroeconomic uncertainty and investment relationship for Turkey Economic Journal of Emerging Markets investment macroeconomic uncertainty bound testing |
| title | Macroeconomic uncertainty and investment relationship for Turkey |
| title_full | Macroeconomic uncertainty and investment relationship for Turkey |
| title_fullStr | Macroeconomic uncertainty and investment relationship for Turkey |
| title_full_unstemmed | Macroeconomic uncertainty and investment relationship for Turkey |
| title_short | Macroeconomic uncertainty and investment relationship for Turkey |
| title_sort | macroeconomic uncertainty and investment relationship for turkey |
| topic | investment macroeconomic uncertainty bound testing |
| url | http://uiistage.openjournaltheme.com/3310/index.php/JEP/article/view/15267 |
| work_keys_str_mv | AT pelinogeguney macroeconomicuncertaintyandinvestmentrelationshipforturkey |